Oil's retreat below $100 a barrel on Friday cooled the inflation scare that had driven U.S. Treasury yields to their highest level since early 2025. The pullback held even as the U.S.-Iran conflict widened and President Donald Trump weighed a bigger strike.
Brent crude, the global benchmark, retreated to about $98.82 a barrel on Friday, slipping back below $100 after an earlier spike. The previous surge traced to Houthi attacks on Saudi tankers in the Red Sea, which had rattled equities before the move reversed.
Yields ease after Thursday's oil spike
The bond market had felt the pressure first. The 10-year Treasury yield fell to 4.685% on Friday. That came a day after it climbed above 4.7%, its highest since January 15, 2025.
That jump followed Brent's move above $100, which reignited fears about inflation. The 2-year note, which tracks Fed policy more closely, pulled back to 4.333%. With crude back below $100, the retreat is seen as reducing inflation and energy-cost pressures and supporting equities.
Trump weighs a bigger strike on Iran
The geopolitical backdrop stayed tense. Trump said he would soon decide whether to launch a bigger attack on Iran after the conflict reached the Red Sea.
U.S. forces have struck Iranian targets over the past two weeks, with Central Command completing a 13th consecutive night of strikes. He told Axios the proposed strikes would be bigger than anything in the war so far: "I am considering a massive attack. Bigger than ever before."
Traders stay cautious on a record
Even with the conflict, traders appear cautious about betting on a record for oil. Prediction markets put the odds of crude setting a new all-time high by September 30 at 10.5%. By December 31, those odds rise to 18.5%.
Sources: CNBC, Crypto Briefing
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